An Interview with Alejandro Martinez Cuenca

Cigar Aficionado sits down with the owner of Nicaragua's oldest cigar brand, Joya de Nicaragua.

A business leader and politician, Alejandro Martinez Cuenca is the man behind the rebirth of
Nicaragua's oldest cigar brand, Joya de Nicaragua. When he bought the company in 1994, it was a
faded jewel, still struggling to recover from a war that had left the factory burned to the ground
and a failed social experiment in which company operations were managed by factory workers.
Martinez Cuenca brought fresh ideas to the company, rehired many of its old rollers and blenders,
and eventually released Joya de Nicaragua Antaño 1970, a full-bodied cigar that recaptured the
taste of the brand's glory days.

Martinez Cuenca, 59, is a member of Nicaragua's Sandinista
party, which sprang from the populist movement that overthrew the Somoza dictatorship in 1979. He
has worked both with and against Nicaragua's recently reelected president, Daniel Ortega. Most recently, he
unsuccessfully opposed Ortega in a bid to be their party's presidential candidate. Ortega had led
the Sandinista rebellion, which culminated in the nationalization of industry and the seizure of
land from private owners, then ruled Nicaragua during the 1980s. He first served as president from
1985 to 1990, when the United States embargoed Nicaraguan goods.

Senior editor David Savona sat
down in Managua with Martinez Cuenca in January, during the week of Ortega's inauguration, to
discuss the political outlook for Nicaragua as well as the revitalization of the Joya de Nicaragua
brand.

Savona: Let's talk about your involvement with Tabacos Puros de Nicaragua, the maker of Joya de
Nicaragua cigars. When did you acquire it?

Martinez Cuenca: Let me tell you why I acquired it. When I was 16 years old, one day my father
found me smoking a cigarette, and we were living at that time at the house of an uncle here in
Managua who smoked cigars. He said, Give me that cigarette—from now on you will smoke these. And
he gave me a big Joya de Nicaragua to smoke. As a punishment. [Laughs.] At that moment I quit
smoking. When I was 30, a friend of mine from Spain brought me a box of Davidoff, and that was my
first box of cigars. It was a pure Cuban cigar, before Davidoff went to the Dominican Republic.
Two years after, I became minister of trade. When Somoza left the country, this company became
public, so I was asked to try to look for markets for the cigars, and I visited for the first time
the factory in Estel'. This is 1979.

Q: Was it was very busy at the time?

A: Extremely busy. And my big question was, How can you replicate a cigar, with so many people
participating in its creation, and make sure that it's the same cigar with the same quality and
the same blend at the end of the road? How, without machines, can you do that? And that was my
first big amazement about cigars. Then I went to Cuba and I got familiar with other companies that
were manufacturing Havana cigars, and I always posed the same question: what makes a cigar so
unique, and so human? It became a fascination to me. When Ortega loses the election, the company
was loaned to the workers of the company, so they would continue producing and have something to
live from.

Q: How did that work out?

A: That was 1990. In 1992, that whole project stumbled, went to pieces. Imagine 80 workers
without a head.

Q: Eighty bosses.

A: Eighty bosses making a cigar. In 1992, I knew Joya de Nicaragua was being manufactured by my
dear friend Nestor Plasencia in Honduras.

Q: So Joya was made in Honduras during the embargo?

A: Yes. And I knew there was a problem with the trademark—I knew Somoza had sold the trademark.
Then it was decided that it was going to be privatized. And one day, Leonel Raudez, who is now my
general manager, walked into my office and said, "Doctor, help us. They are going to close that
company. We have the know-how." I didn't want to get involved with anything that had been
nationalized. But he opened my interest. I called the minster of the presidency and asked if it
was true he was going to sell the cigar company. He said, yes, it was going to go to a public
bidding. It was all in shambles.

Q: Was it operational?

A: The building was there, there were two or three people making cigars. I had someone do an
evaluation of the company, and I bought the company for $600,000 in 1994. And I said, "Let's look
for the old workers who worked here." I rehired most of the best-known rollers, tobacco producers,
and started working with them. But then I realized what I had. In 1995, fortunately, the [cigar]
boom started, and that helped us put together a team of well-known specialists who started
producing tobacco. The boom helped us. It created the conditions for us to be alive today, because
when the boom started we had only made $40,000. I said to my workers, "We are going to rebuild
this company. I want your initiatives, I want your discipline." It was a difficult task, trying to
consolidate our sizes. I had been familiar with it only because I smoked it. When I was minister
of trade, there used to be two guys who would come to my office, Silvio and Alfredo Perez [of
tobacco grower ASP Enterprises Inc.]. They came and told me, "We can't get out of Nicaragua—they
don't give us the visa." I put them in contact with Immigration so they could continue doing
business. And every Wednesday, they would visit me and keep me informed. In 1995, I called Alfredo
and said, "I have a problem. Help me." He said, "What do you need?" I said, "I need tobacco." He
said, "Look, the only place we can bring it is from Connecticut or Ecuador." Connecticut was too
expensive, so I said Ecuador.

Q: That was Connecticut seed from Ecuador?

A: Yes, that's how I started remaking the Joya, with Connecticut seed.

Q: What was the wrapper in the old days? Nicaraguan?

A: Nicaraguan Habano. There was a tremendous shortage.

Q: When was this?

A: Nineteen-ninety-five. During the boom we produced that kind of cigar. But the boom was
horrible at the end of the day. When the boom was over, at the end of 1998, all the good years of
the boom gave us a financial reserve, so we never went to the bank. I told my shareholders we are
benefiting from an accidental boom—we kept building the company. It was the smartest thing to do.
We would not have been able to survive the downturn. That's when I decided to make the Antaño.

Antaño comes to the market in 2000. It took two years to find out what tobacco to use, blend
it, and manufacture the cigar of the quality you see here.

Q: What did you want to do with Antaño? What was the idea?

A: I had heard that in the 1970s Joya de Nicaragua had replaced the Cuban cigar at the White
House receptions. They were buying Nicaraguan cigars because it was the closest to Cuban Vuelta
Abajo. With Mario Perez, we put together a group of five rollers who had been with the company
from the very beginning, and we dedicated for two years blending.

Q: So you were trying to capture the taste of the old days?

A: Yes, that's why the name: antaño means circa. And the person who manufactured the Joya in
the 1970s was our major blender. After thousands of blends, he said, "This is it."

Q: So it wasn't just trying to recapture the style, but to actually make the same blend?

A: Yes. So that's how I came out with Antaño. Before throwing it into the market, I wanted it
to be Joya de Nicaragua Antaño. Joya de Nicaragua was registered by my company everywhere but the
United States. [Altadis S.A. owned the U.S. rights by virtue of its acquisition of Hollco-Rohr.] I
got in contact with Mr. [Theo] Folz. I went to the United States, and I found a real gentleman.
That guy is the most astute guy I ever negotiated with. In 1998, we spent four hours in a
negotiating room, and at the end of the day, he said, "This is the deal: you take it, or leave
it." I said, "I take it." That's when I bought the trademark.

Q: What was the consumer reaction to Antaño?

A: When we sent the first trials, Brad [Weinfeld, who is in
charge of the brand at S.A.G.
Imports] called me and said, "We hit it. That's what the market wants."
And then, some years
later, some people tried to get the same wrapper, the same filler, but
they couldn't make the
Antaño. When we came out with Celebración, we asked the question why the
market hasn't taken to
Celebración, which is a full-bodied cigar, but much less strong.

Q: It hasn't been the hit that Antaño is?

A: No, no, no. If I were to choose between Celebración and
Antaño, for a soft, nice smoke but
still with strength, I would take Celebración.

Q: When people reach for a Nicaraguan cigar like yours, what
do they expect?

A: I want them to recognize that Nicaraguan tobacco is a
tobacco that has won its place in the
market not only because it resembles Cuban tobacco. Nicaraguan tobacco
has much of the greatness
of Cuban tobacco, but it's more than that. It's something genuine. When
you come to Nicaragua and
smoke a cigar, you will find the Nicaraguan tobacco has some likeness to
the Cubans, but there is
more to it. There is the Nicaraguan identity.

Q: What does the future hold for Nicaragua?

A: I think there is no possibility that we're going to go back
to the past. Everything that is
in front of us—regardless of who is sitting in the presidency of
Nicaragua—should be forward.
Nicaraguan tobacco, regardless of the political situation in this
country, will continue to be the
best tobacco in the market, the best quality. I am still confident that
Nicaragua will continue to
be a good place to make cigars and grow tobacco as we have been in the
last part of the 1990s and
the 2000s.

Q: How important is the cigar and tobacco business to
Nicaragua?

A: There are 23 formal businesses dealing with tobacco and
cigars in this country. There are 14
owners. In total, we are benefiting around 80,000 individuals directly
and indirectly in
Nicaragua. In the northern part of Nicaragua, including Jalapa, Ocotal,
Condega, Estel', you see
booming activity. The major cause of that is tobacco: production of
leaves, companies that
manufacture boxes, companies making the tools for cigars,
cellophane—simple companies. At the end
of the day, you're talking about 80,000 Nicaraguans depending on the
business. Sugar doesn't
contribute as much. The only industry that can compete is coffee. Aside
from coffee, tobacco is
the highest labor-intensive activity that is carried out in this
country.

Q: With Daniel Ortega being made president again, many people are
concerned about the future,
given the man's past.

A: I think people are taking the new situation in terms of
Ortega relatively quietly, not too
much concern. People understand very well that the vote that Ortega has
taken is very fragile.
There's the minimum required number of votes. People get concerned
because they don't know what
route he is going to take. What I have said is there aren't too many
routes—continue, that's the
only route, because anything else would be putting the country in a very
difficult situation. The
country cannot afford it.

The point is, here we are, and the new president is being sworn in,
and everybody is saying,
I'm going to wait and see. I don't see people moving out of the country
as they did in the 1970s
and 1980s for one basic reason: I think the experience of Nicaraguans
outside Nicaragua was so
harsh and so difficult—even though some of them were successful—that
people are convinced that if
they leave this place, they are going to lose their niche and others
will take it.

Q: That said, though, do you think some people are thinking of
contingency plans? Many
cigarmakers making cigars here also have cigar factories across the
border in Honduras.

A: I think anyone who is serious in business needs to have a
contingency plan. I think it would
be terribly irresponsible, not only in terms of yourself, but in terms
of your customers, not to
have a backup plan in case things go worse than you think. At the end of
the day, we are 14
individuals making decisions on what to do in regards to cigars in this
country. And I have talked
to all of them. In the beginning they were concerned. And I have told
them, it's never going to
happen.

Q: You don't think nationalization will happen in Nicaragua
again?

A: No. And let me tell you, I never thought Ortega would win.
That's why I proposed an
alternative candidacy.

Q: You yourself.

A: Yes. Once he won, it's important we all have some backup
alternatives, but it's important to
take the opportunities the country has today, which is demonstrating
tobacco is improving
tremendously, not only in terms of volume of tobacco being exported,
volume of cigars being
exported, but also people are more concerned today with quality than
they were before. So leaving
this niche would be suicidal for anyone. You have a lot of producers
from the Dominican Republic
buying tobacco from Nicaragua, you have many Hondurans buying tobacco
from Nicaragua. Why leave
that to someone else?

Q: Should investors be worried about the close relationship
that's developing between Ortega
and Venezuelan president Hugo Chavez?

A: The talk of Ortega on his partnership with Venezuela should
be viewed more of rhetorical
position than anything else, even if the many promises Chavez made for
cooperating with Nicaragua
were to become real. Do not forget theÊpolitical leverage Ortega has is
very limited, and
therefore, political realism should prevail over and above the concerns
that have now
flourished.

Q: You were instrumental in reconvening the group of
Nicaraguan cigarmakers and tobacco
growers, which convened in December. Can you talk about that?

A: When I called for this organization to finally be put on
its feet, I told them there is the
possibility that Fidel [Castro] is going to pass away. Even if he
doesn't pass, the reality is,
now you have a Democratic majority in the [U.S.] House and Senate. I
think sooner or later Cuba is
going to open. What I said to that group is we should not [pull
together] because of fears of
Ortega. We should do it to prepare ourselves better, to continue to put
the name of Nicaraguan
tobacco on the minds of international consumers in the United States and
everywhere else, so when
Cuba opens we will not be hurt as an industry, and we will maintain the
niche markets. So
regardless of what happens to Cuba, we will continue to sell our
products and continue to grow.
Some say Cuba is never going to compete with us. But they now make 300
million cigars for the
market, and you don't feel it that bad. But when they have the American
market open, most likely
most of the product is going to go there. The important thing is we
continue to hold our niches in
the American market, and whatever is left in the rest of the world, we
can take opportunities in
those markets.

Q: But you compete with Cuban cigars now: people in the United
States get Cuban cigars now, not
legally, but they get them.

A: Yes, it's true, but it's not the same as when you have,
say, 50 million sticks around than
when you have 200 million sticks.

Q: At that meeting, wasn't the prime area of concern for
members the election of Ortega?

A: Most of the group was careful not to express too much
anxiety. I don't think Ortega is going
to break with the international organizations. It would be suicidal.

Q: Didn't Ortega say he was breaking from CAFTA [the Central
American Free Trade Agreement] at
his inauguration?

A: Ortega has never said since his inauguration he would
remove Nicaragua from CAFTA, even
though he signed ALBA [a cooperation agreement between Venezuela, Cuba
and other countries
promoting redistribution of wealth]. According to press reports, in the
recent meeting Ortega held
with the secretary of commerce of the U.S. in Ecuador, Ortega reaffirmed
his commitment to hold to
CAFTA in spite of the cooperation agreement with Venezuela. By now,
Ortega should be clear in his
mind that there is no return in terms of CAFTA, because such action
would weaken not only
Nicaragua, but would undermine any possibility of reaffirming a
constructive and good working
relation with the U.S. and his presidency, and I believe Ortega does not
want that to happen.

Q: You know Ortega, probably better than anyone else in the
tobacco industry. What kind of a
man is he?

A: I met him for the first time in 1977. And then I worked
with him in '78 in Costa Rica. I
know the young Daniel, the middle Daniel and the older Daniel.

Q: Are they different?

A: The Daniel that I met in '77 and the Daniel in 2007 is a
completely different Daniel. In '77
he was nothing; now he is a very eloquent, very intelligent, very able
politician. Nobody can
doubt that. He was able to split the vote of the right. He was able to
maintain the party of which
I am a member, and to act politically in searching for solutions to
avoid having the party split.
We worked together very closely in the 1980s, and we had our
disagreements. When he lost in 1990,
everybody thought Ortega was over. And nevertheless, he maintained the
party. And even though he
was in the opposition with no power, he was able to maintain that level
of political acuity. The
Ortega I am referring to, the Ortega of the 1990s, he was a negotiating
Ortega. In the 1970s, he
was a guerrilla. So he was always negotiating, and that made him open to
the opportunity to
continue building. Even though he lost three times, he continued to be
the candidate of the
party.

Obviously, he did things with which I completely disagree. He went
against the rules of the
party when he eliminated the possibility of a primary process in the
last election, and that's why
I opposed Ortega in that regard.

Q: So it was his doing that changed the election laws?

A: Yes. Negotiating with [Arnoldo] Alemán, who was then
president, they changed the
constitution, and they decided to move the level that [a candidate]
needed to win from 45 to 35
percent, as long as the one that was behind you was five points behind.

Q: That's quite a difference. Was that when you decided to
oppose him?

A: In 2001, I ran in the primary against Ortega, I respected
the results when they were not
favoring my candidacy, and I even worked for his candidacy. In '06 I
told him, if you don't
respect the bylaws of the party, I cannot support your candidacy. The
party establishes that in
order to establish the candidate of a political party, you go through a
primary process. You don't
do it by hand, which is what happened.

Q: So there was no vote to make him the candidate of the
Sandinista party?

A: He was selected by his friends, who decided to violate the
bylaws of the party. That's my
criticism of Ortega. Once he won, I cannot oppose the fact that
everybody else played by the
rules, and the rules gave him the majority of the vote, regardless of
how small or how big.

Q: Did you leave the Sandinista party?

A: No. I will continue fighting.

Q: In the United States, "Sandinista" is a bad word. Tell us
what it really means, what the
purpose of the party is, so people can understand what it means in its
purest form.

A: The extreme right vision of the world basically is
understood as to let the minority produce
growth and then it's going to filter down to the large majority of the
people. That's why I became
part of the revolution in 1970, because I was convinced, coming from a
high-middle-class family,
that the model of development that was being pushed by the Somoza
regime, which was basically an
extreme right-wing vision, did not work. And that's why I became a
Sandinista. Because we feel you
must give priorities to public policy, that help education, as you do in
the United States. Here
you are on the right or on the left. If you are critical of the model,
you are on the left. The
Sandinistas have been critical of the model of the filtering down
process.

Q: The trickle-down model?

A: When you have public policy being dictated in the assembly,
when you promote investment,
when you promote growth and stability and respect for property
rights—once all that is done, there
shouldn't be a difference between the left and the right. Until now,
there has been a perception
that the left doesn't respect private property, doesn't respect human
rights, doesn't respect
criticism from the press. That taboo on the left is not part of my
thinking. It might have been
different in the 1980s, but at this time the difference between a
Sandinista and an ultra-right
person should be that we have a different model, but coming from a
common ground: there are basic
elements that both the right and the left have to respect.

Q: It seems as if Ortega, in having changed the election
process, has already shown disrespect
for some of the principles you mention.

A: When you have Hugo Chavez trying to expropriate a TV
channel because they criticize him,
obviously that has pulled back the stigma of the left. All of that is
against the liberties we
have won. To answer your question, what is the difference of the
Sandinista today versus the
1980s? In the 1980s, we did not commit ourselves to recognize property.
The Sandinistas recognize
that that was a big mistake, to try to give out wealth in order to
improve the distribution of
wealth in the country. It's more important to give opportunities to
people.

Q: We spoke about what the cigarmakers of Nicaragua think
about the election. What of the
opinion of the international community, those who might be considering
investing in Nicaragua? Do
you think this has given them pause?

A: If I am reading the signals correctly, people are saying,
Let us wait and see. If I am
investing in something, I'm not going to stop, but if I wanted to
complete this investment in a
period of six months, I might want to postpone it. I think it's
understandable. That's why Ortega
has to understand that this is a tango that takes two to dance. Unless
there is investment, the
country cannot solve the problems of poverty and unemployment. Some say
Hugo Chavez may give us
support if we lose investments, but how long will that last? It should
be looked at in the
long-term perspective.